About Raft

Bhim5551

"Raft is a protocol for minting R stablecoins, which are backed by LST with overcollateralization and carry liquidation risk. Users can earn sustainable income by depositing at a savings rate.

My view on $R is as follows:
1. Lack of Innovation: Raft is a fork of Liquity with only some minor changes, so there isn't much innovation on the product side. Therefore, it may be easily surpassed, especially with the release of Liquity v2, which will utilize LST.
2. Not a Medium of Exchange: R is a yield-bearing stablecoin, and the protocol doesn't prioritize using it as a medium of exchange. Most users hold R to earn the annual yield it provides.
3. Anchored Stability: Currently, R is valued at approximately $0.98, and the team is working on finding a solution to restore its peg. The team proposes implementing interest fees instead of one-time fees for minting R. By doing so, they aim to restore the peg through incentivizing buying pressure in the market. The reasons for the deviation can be attributed to the one-time fee for minting R, lack of liquidity, and lack of organic demand-driving use cases.
4. Limited Value Proposition Compared to Competitors: At this point, users don't need to pay interest fees to borrow R, so they can leverage their ETH positions. This is the primary value proposition of $R. However, if the team decides to change this model, Raft will have no value proposition.
5. Yield-Bearing Asset: Since R can generate returns for holders, some may use it purely as a store of value. If users trust its pegged stability, it can be a good way to earn ETH yields.
6. Capital Inefficiency: Since $R is a stablecoin in a CDP model that requires overcollateralization and carries liquidation risk, it's not a capital-efficient model for retail users. This will limit its growth potential, as scalability possibilities are limited.

Please note that this is a translation of the provided text, and it may not represent a personal view or opinion."